Emerging ETF Gains on Cheap Valuations as Brazil Rebounds

The iShares MSCI Emerging Markets
Index exchange-traded fund rose, rebounding from a 10-week low,
as the cheapest developing-nation stocks since December lured
investors while Brazilian and Russian shares gained.

OAO Gazprom, the world’s biggest natural gas producer,
climbed for the first time in three days while pulpmaker Suzano
Papel & Celulose SA jumped in Sao Paulo. Daelim Industrial Co. (000210)
added 4.3 percent after Woori Investment & Securities Co. said
the South Korean builder’s order margin may recover. Tencent
Holdings Ltd. (700), China’s largest Internet company, slipped the
most since Dec. 3 in Hong Kong. Brazil’s Bovespa index advanced
for the first time in eight days.

The iShares ETF, which tracks equities including Samsung
Electronics (005930) Co. and America Movil SAB, gained 0.4 percent to
$43.28 in New York, paring a weekly slump of 1.6 percent. MSCI
Inc.’s Emerging Markets Index was little changed at 1,053.39, as
429 stocks rose while 343 declined. The gauge, which had its
worst weekly drop since November, trades at 10.2 times estimated
earnings, the cheapest level since Dec. 21, according to weekly
data compiled by Bloomberg.

“While valuations have turned attractive, there are no
strong catalysts,” Kim Dae Young, a fund manager at KB Asset
Management Co., which manages about $28 billion in assets, said
by phone from Seoul. “Recent correction could continue in the
short term.”

Business confidence in Germany, Europe’s largest economy,
rose more than economists forecast to a 10-month high of 107.4
in February, according to the Munich-based Ifo institute. That’s
the biggest increase since July 2010 and the fourth straight
monthly gain. Economists surveyed by Bloomberg predicted an
advance to 104.9.

‘Steady’ Inflows

Emerging-market funds continued to receive “steady”
inflows for the 24th week, Markus Rosgen and Yue-Hin Pong,
analysts at Citigroup Inc., wrote in a report today, citing data
compiled by research firm EPFR Global.

The Czech koruna slipped for a third day, while the Indian
rupee rallied the most in more than three weeks versus the
dollar. The rupee rose on optimism slowing inflation and
prospects of an economic revival will attract capital inflows.

Health Stocks

A gauge of health-care stocks jumped 1.2 percent, leading
gains among 10 industry groups in the MSCI Emerging Markets
Index. Technology shares dropped 0.6 percent, the biggest
decline. The broader gauge has fallen 0.2 percent this year,
compared with a 4.8 percent gain in the MSCI World Index of
developed nations. Companies on the MSCI World trade at 13.2
times estimated profit.

Trading volume for the Shanghai gauge was 27 percent lower
than its 30-day average, data compiled by Bloomberg show. Volume
was 50 percent more for the Jakarta Composite Index, which rose
0.4 percent.

Daelim Industrial advanced the most since Jan. 16 after
Woori Investment said the company’s order margin will recover
this year. Samsung Techwin Co. (012450), a South Korean defense equipment
maker, jumped 6.2 percent, the steepest advance in the MSCI
Emerging Markets Index.

Technology Shares

Samsung Electronics, the stock with the biggest weight on
the emerging markets gauge, fell 1.3 percent, the most since
Jan. 28, leading technology shares lower after a report
yesterday showed euro-area services and manufacturing contracted
at a faster pace than economists forecast in February. LG
Display Co. (034220), the world’s second-largest maker of liquid-crystal
displays, lost 0.8 percent.

Tencent Holdings lost 2.7 percent, its second day of
declines. The company has sought ID card details from official
account WeChat users who send feeds to followers, according to
its website. China passed rules Dec. 28 requiring people to
identify themselves when signing up for Internet and phone
services as the government tightens control over the world’s
largest population of Web users.

The extra yield investors demand to own emerging-market
debt over U.S. Treasuries was unchanged at 284 basis points,
according to JPMorgan Chase & Co.’s EMBI Global Index.